9 NYCRR Part 1920 - Executive Department

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Source version current through Sep 15, 2021

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9 NYCRR 1920.1 - Purposes

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

These regulations implement the provisions of Article XVIII-A of the Private Housing Finance Law (the Act) which establishes a program to provide grants or loans which shall be used to pay for all or a portion of the project costs of constructing or rehabilitating turnkey/enhanced rental projects, which shall thereafter be owned by eligible owners for the benefit of persons of low income.

9 NYCRR 1920.2 - Definitions

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)All definitions set forth in 9 NYCRR section 1900.3(a) shall be applicable to this Part unless otherwise defined herein.

(b)

(1)Demolition shall be the complete removal of the structure(s);

(2)Eligible applicant shall be:

(i)a housing development fund company incorporated pursuant to Article XI of the Private Housing Finance Law;

(ii)a not-for-profit corporation or a charitable organization, which has as one of its primary purposes the improvement or provision of housing for persons of low income (or a wholly owned subsidiary of such corporation or organization);

(iii)a municipality;

(iv)a municipal housing authority; or

(v)a person, firm, partnership or corporation which has agreed to limit profits or the rate of return of investors in accordance with a formula established by the Corporation.

(3)Eligible owner shall be:

(i)a housing development fund company incorporated pursuant to Article XI of the Private Housing Finance Law;

(ii)a not-for-profit corporation or charitable organization, which has as one of its primary purposes the improvement or provision of housing for persons of low income (or a wholly owned subsidiary of such a corporation or organization);

(iii)a municipality;

(iv)a municipal housing authority; or

(v)a partnership of which at least fifty percent of the controlling interest is held by a corporation or organization as defined in subparagraph (ii) of this paragraph and which has agreed to limit profits or the rate of return of investors in accordance with a formula established or approved by the Corporation.

(4)Project shall be:

(i)a vacant property converted or rehabilitated to residential rental use;

(ii)a newly constructed rental property; or

(iii)an existing state-aided public housing project where more than 30 percent of its units are vacant.

(5)Reserve fund shall be a fund or funds to be used in accordance with guidelines established by the Corporation for on-going operation and maintenance costs and replacement costs.

(6)Total project costs shall be the sum of all project costs from all funds, including site acquisition, development costs, staff costs, reserve costs and working capital.

(7)Turnkey project costs shall be those costs for which grants and loans made under the act may be used.

(8)Vacant property shall be an existing structure which is not occupied.

(9)Working capital fund shall be a fund to be used for start-up expenses including, but not limited to, liability insurance, fidelity bond premiums, utility hook-up deposits, maintenance equipment, movable furnishings and equipment and other initial project related expenses as approved by the Corporation. Said approval shall be based on the demonstrated financial needs of the project.

9 NYCRR 1920.3 - Operational bulletins and procedural manuals

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NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

The Corporation, from time to time, shall issue operational and procedural manuals and amendments thereto as it deems necessary for the implementation of the Act and of these regulations.

9 NYCRR 1920.4 - Conflict of interest

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)The following are restricted from holding voting board membership, serving as officers of the applicant and/or staff management positions, except where otherwise required by statute:

(1)State legislators and members of their staffs who hold policy making positions;

(2)Commissioners and chairpersons of state departments and their deputies and assistants (including members or directors of public authorities, public benefit corporations, boards, commissions and councils);

(3)Staff of the Division of Housing and Community Renewal;

(4)Statewide elected officials, including the Governor, Lieutenant Governor, Attorney General and Comptroller, and members of their staffs who hold policy making positions;

(5)Chief executive officials and members of the legislative bodies of counties having a population of 275,000 or more, within which the project is located, or cities, towns and villages having a population of 20,000 or more, within the county in which the project is located, except where board membership for such persons is mandated by other relevant Federal or State statutes; and

(6)Political party chairpersons, party organization leaders and members of their executive committees in the state, in counties having a population of 275,000 or more within which the project is located, or in cities, towns and villages having a population of 20,000 or more within the county in which the project is located.

(b)The following shall not receive any compensation whatsoever from a recipient organization, directly or indirectly, for services or goods rendered or delivered to such organization, only if the goods or services are provided pursuant to an award or contract let, unless otherwise required, after a good faith effort to obtain competitive prices is made, the results of which were reported in writing prior to the award of the contract and were approved by the Corporation, which approval shall be based on comparison to arm's length transactions and the needs of the project:

(1)State legislators and members of their staffs who hold policy making positions;

(3)Staff of the Division of Housing and Community Renewal;

(4)Statewide elected officials, including the Governor, Lieutenant Governor, Attorney General and Comptroller, and members of their staffs who hold policy making positions;

(5)Chief executive officials and members of the legislative bodies of counties, cities, towns and villages in which county the project is located;

(6)Political party chairpersons, party organization leaders and members of their executive committees in the state, counties, cities, towns and villages in which county the project is located;

(7)Voting board members and officers, except for salary payments of officers which shall require the approval of the Corporation, which approval shall be granted if the duties assigned to the officer correspond to duties normally assigned to an executive director;

(8)Staff members of the recipient organization, except for salary payments;

(9)The immediate families of persons in categories in paragraphs (1) to (8) of this subdivision; and

(10)Any firm, association, corporation or partnership in which any individual listed in subdivision (a) or (b) of this section holds an interest of ten percent or more.

(c)These provisions apply to all persons and entities whether or not their involvement with, or compensation from, a recipient organization is related to the project funded pursuant to this program.

(d)All or some of the provisions of subdivisions (a), (b) and (c) of this section may be waived by the Corporation if, in its discretion, it determines that:

(1)the eligible applicant or eligible owner is in conflict with said provisions as a result of requirements of statute or governmental agreement; or

(2)the primary activities of the eligible applicant or eligible owner are unrelated to programs funded by the Corporation or the Division of Housing and Community Renewal and that there are sufficient safeguards to protect the interests of the proposed project and the Corporation. The Corporation may establish conditions and qualifications for any such waiver issued.

(e)The provisions of subdivision (b) of this section shall not apply to individual occasions of compensation for goods or services rendered which do not exceed $2,500 unless the accumulation of said compensation should exceed $2,500 within a year.

9 NYCRR 1920.5 - Turnkey Housing Trust Fund

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)Grants or loans may be made by the Corporation to eligible applicants for all or part of project costs.

(b)The Corporation shall issue funding reservations to eligible applicants setting forth the prerequisites of any grant or loan.

(c)When the eligible applicant secures financing for the construction or financing of the project the Corporation shall enter into an agreement with the eligible applicant and an agreement with the eligible owner.

(d)Grants or loans may be made by the Corporation upon completion of construction or rehabilitation of a project as defined in the purchase contract.

(e)All projects shall be operated as rental residential properties.

(f)The term of regulation of a project shall commence on the date construction or rehabilitation is completed, as determined by the Corporation pursuant to the purchase agreement, and shall terminate 99 years thereafter.

9 NYCRR 1920.6 - Turnkey project costs

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)Turnkey project costs shall be the reasonable and necessary costs for planning, financing, acquiring land or buildings and constructing new buildings or rehabilitating existing buildings.

(b)Acquisition costs shall account for no more than 20 percent of turnkey project costs.

(c)Turnkey project costs may also include:

(1)all or a portion of the reserve fund and the working capital fund; and

(2)interest incurred on construction financing.

(d)Turnkey project costs may not include:

(1)costs of nondwelling related facilities;

(2)eligible applicant's administrative costs; and

(3)the costs of demolition or acquisition of land and buildings if the project is located in a city with a population of one million or more.

9 NYCRR 1920.7 - Selection process

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)Request for Proposals.

The Corporation shall issue a request for proposals at such intervals as it deems necessary for the optimal selection of eligible applicants and eligible owners. The Corporation may incorporate into each request for proposals such terms and conditions as it deems, in its sole discretion, to be reasonable to a particular project.

(b)Proposals.

(1)Eligible applicants may submit proposals in response to a request for proposals issued by the Corporation.

(2)A proposal submitted by an eligible applicant shall include:

(i)A development timetable which shall include projected time schedules for:

(a)commencement and completion of regulatory and review processes and approvals;

(b)construction loan closing;

(c)commencement and completion of construction;

(d)occupancy availability and full occupancy dates; and

(e)any other information required in the request for proposals;

(ii)an operating and maintenance budget;

(iii)an estimate of total project costs which shall include the costs necessary for:

(a)construction or rehabilitation;

(b)the working capital fund and the reserve fund; and

(c)other reasonable costs necessary for completion of the project;

(iv)evidence that the municipality within which the project will be located is experiencing a shortage of affordable housing for persons of low income and that the project will contribute to reducing such shortage;

(v)the names, addresses and business backgrounds of the principals involved, including those of the eligible owner, the nature of their fiduciary relationship and their financial relationship, past, present and future, to the project and to each other;

(vi)the identity of the eligible owner if it is not the eligible applicant;

(vii)evidence of consultation with an eligible owner; and

(viii)any other information the Corporation may require in its request for proposals.

(3)A nonrefundable submission fee, not to exceed $1,000, may be may be charged by the Corporation, if stated in the request for proposals, which shall be submitted with the proposal. In determining the fee, the Corporation shall weigh the costs of administering the Act and the interest in encouraging complete and qualified proposals.

(c)Evaluation of proposals.

(1)The Corporation shall evaluate the proposals pursuant to the following criteria:

(i)readiness of project to proceed;

(ii)quality, experience and capacity of the proposed eligible applicant and eligible owner;

(iii)quality of design;

(iv)need and marketability;

(v)turnkey project costs; and

(vi)operational plan.

(2)The Corporation shall not select a proposal whose estimate of turnkey project costs for construction or rehabilitation exceeds a ceiling amount established by the Corporation consistent with the reasonable costs of constructing or rehabilitating projects in the municipality in which the project is located.

(3)The Corporation shall not select a proposal by a city with a population of one million or more if the project is expected to contain thirty percent or more permanent housing units occupied by eligible homeless families as defined in article 3-A of the Private Housing Finance Law unless the Corporation, in its discretion, determines that funding for the purpose of undertaking the project is unavailable for the project pursuant to article 3-A of the Private Housing Finance Law.

(4)The Corporation shall give preference to projects as required by section 1106-d of the Act.

9 NYCRR 1920.8 - Project supervision

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)Construction financing.

An eligible applicant shall not borrow any funds for the project without the prior written approval of the Corporation. Said approval shall be based on various factors including, but not limited to, the demonstrated need for additional funds for the project, the project's capacity to support additional debt and the effect of such additional debt on the Corporation's interest in the project.

(b)Resale provisions.

(1)A project may only be transferred or sold with the approval of the Corporation to an eligible owner approved by the Corporation. Said approval shall be based upon various factors including, but not limited to, the needs of the project, compliance with the purposes of the Act and the ability of the proposed transferee to operate the project.

(2)The resale price of a project shall be subject to the same limitations as that set forth for rental projects in section 1102(3)(f)(ii) of the Private Housing Finance Law.

(c)Establishment of reserves and funds.

(1)The working capital fund shall be set up and managed by the eligible owner prior to occupancy and shall be a turnkey project cost. The fund may be used during the first year of operation of the project, after which the remaining balance of the fund shall be deposited in the operating reserve fund.

(2)Reserve fund.

(i)The reserve fund shall initially be not less than five percent of turnkey project cost, exclusive of the reserve fund.

(ii)If the source of the initial reserve fund is not the Corporation, either cash or adequate marketable collateral shall be deposited into the reserve fund prior to the disbursement by the Corporation of any grant or loan for the payment of any turnkey project costs except for planning costs.

(iii)The reserve fund shall consist of separate accounts for an operating reserve, replacement reserve and such other reserves as the Corporation may require in a request for proposals.

(iv)The reserve fund may be a turnkey project cost.

(v)The reserve fund shall be deposited in a banking institution whose principal place of business is located within the State of New York and which has a proven record of investment in the community in which the project is located as determined by the Corporation.

(vi)The reserve fund may not be used until one year after substantial occupancy, except in the event of an imminent threat to the health and safety of the tenants.

(vii)The terms and conditions for funding and management of the reserve fund shall be set out in Corporation policy and the agreements between the Corporation and the eligible owner.

(d)Contract provisions.

(1)All contracts between the Corporation and the eligible applicant or eligible owner shall set forth the following: Except for obligations the Corporation is to assume by contract for the construction, rehabilitation and development period of any project, neither the Corporation, the New York State Housing Finance Agency, nor the State shall have any responsibility or liability as to construction, rehabilitation, operation, maintenance, repair or use of projects, unless otherwise specifically provided by law.

(2)The Corporation may provide for the deposit of any grant or loan directly with a lending institution pursuant to an escrow agreement satisfactory to the Corporation. The Corporation shall take into consideration such factors as compliance with its investment policy and the needs of the project.

(e)Project administration.

(1)Subject to the availability of funds, the Corporation may provide technical services or assistance or contract to provide for technical services or assistance to eligible applicants and owners.

(2)

(i)The Corporation shall review at periodic intervals, but not less than once a year, the performance of eligible applicants and eligible owners.

(ii)Eligible applicants and eligible owners shall provide such periodic reports as the Corporation may require to facilitate the evaluation process. The reports shall include, but shall not be limited to, the following items:

(a)progress of proposed construction or rehabilitation;

(b)the status of project operations; and

(c)annual audited financial statements in accordance with generally accepted auditing standards or such other financial reports as the Corporation may require.

(3)Participation by minority group members and women. All awards of payments, grants or loans of over one hundred thousand dollars shall require the eligible applicant, for projects in which bids are required, to submit for approval of the Corporation a utilization plan as defined in section three hundred ten, subdivision nine, of the New York State Executive Law prior to the award of a payment, grant or loan.

(4)Participation by minority group members and women—contract requirements. All agreements shall Contain such provisions as are necessary to effectuate the provisions of article 15-A of the Executive Law and the regulations promulgated thereunder. Such provisions include, but are not limited to, the following provisions:

(i)a good faith effort to solicit active participation by enterprises identified in the directory of certified businesses maintained by the Governor's Office of Minority and Women's Business Development;

(ii)agreement to be bound by the provisions of section 316 of the Executive Law; and

(iii)requirement that any subcontractor comply with subparagraph (i) and (ii) of this paragraph.

9 NYCRR 1920.9 - Rental policy

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: Sep 15, 2021

(a)Tenant selection.

(1)Tenant selection shall reflect preferences as set out in section 1106-f (4) of the Act.

(2)Written leases with a term of at least one year are required for all tenants.

(3)Each unit assisted hereunder shall be rented as the principal residence of the tenant.

(b)Rent structure.

(1)The rent structure established by an eligible owner shall set forth a plan for basic rents and market rents.

(2)Basic rent.

(i)The basic rent for tenants who qualify under section 1106-f (4)(a) of the Act shall be set at the shelter rent allowance level as established by the State of New York. Increases in this basic rent are limited to adjustments made by the State of New York in the shelter rent allowance as provided for in section 131-a of the Social Services Law.

(ii)The basic rent for the remaining tenants shall be set so that the total rental income for the project shall cover all projected operation and maintenance expenses of the project including deposits to all reserve funds. The basic rent shall be adjusted between tenants to reflect variances in income. Increases in this basic rent shall not exceed United States Department of Housing and Urban Development's annual adjustment factor for the previous year.

(3)Market rent shall be the sum of the basic rent established for each tenant plus an amount equal to a monthly payment charge of the grant or loan made by the Corporation as if it were amortized over a 30 year term with an interest rate set at the U.S. 30 year Treasury bond yield rate in effect at the time the grant or loan was made. Increases in the market rent shall be limited to the percentage increase in the basic rent to which it applies.

(4)Adjustments to the basic rents for tenants who experience changes in income are permitted but may not be adjusted to equal a greater amount than 30 percent of their income.

(5)Tenants who file false or misleading income affidavits or related documents or fail to file such affidavits or documents shall be charged the market rent for their apartment.

(c)Tenant income verification.

(1)An eligible owner shall require that, as a condition of tenancy, all tenants file annually with the eligible owner affidavits of annual household income.

(2)The eligible owner shall make available to tenants a form prescribed by the Corporation upon which such an affidavit may be executed and returned to the eligible owner.

(3)An eligible owner shall require that all tenants attach to their affidavits copies of their most recent federal or state income tax returns or an affidavit certifying that no income tax returns were filed for the most recent tax year.

(4)The filing of a false or misleading affidavit of annual income of the failure to file such an affidavit and the failure of tenant to remedy such deficiency within 60 days after notice from the eligible owner by certified mail shall constitute a violation of a substantial obligation of the tenant's lease and shall justify the commencement of eviction proceedings against such tenant.

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